SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) January 28, 2004
(January 28, 2004)
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ACTIVISION, INC.
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(Exact Name of Registrant as Specified in Charter)
Delaware 0-12699 95-4803544
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
3100 Ocean Park Blvd., Santa Monica, CA 90405
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (310) 255-2000
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NA
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(Former Name or Former Address, if Changed Since Last Report)
Item 7. Financial Statements, Pro Forma Financial Statements and Exhibits.
(c) Exhibits.
99.1 Press Release of Activision, Inc., dated January 28, 2004.
Item 12. Results of Operations and Financial Condition.
On January 28, 2004, Activision, Inc. issued a press release announcing its
financial results for the fiscal quarter ended December 31, 2003. The press
release is attached hereto as Exhibit 99.1.
The information in this Form 8-K and the Exhibit attached hereto shall not
be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of
1934, nor shall it be deemed incorporated by reference in any filing under the
Securities Act of 1933, except as shall be expressly set forth by specific
reference in such filing.
2
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: January 28, 2004
ACTIVISION, INC.
By:/s/ Ronald Doornink
----------------------------
Name: Ronald Doornink
Title: President
3
Exhibit 99.1
Contacts: Bill Chardavoyne
Chief Financial Officer
(310) 255-2229
bchardavoyne@activision.com
Kristin Mulvihill Southey
Vice President, Investor Relations
(310) 255-2635
ksouthey@activision.com
Maryanne Lataif
Vice President, Corporate Communications
(310) 255-2704
mlataif@activision.com
ACTIVISION REPORTS RECORD THIRD QUARTER AND
NINE MONTH FISCAL 2004 RESULTS
- Q3 Net Revenues Increase 34% and Diluted E.P.S. Grows 88% -
- Company Has Three Top-Five Holiday Games According to NPD -
- Company Provides Record Outlook for FY 2005 Net Revenues of $1 Billion -
SANTA MONICA, CA - January 28, 2004 - Activision, Inc. (Nasdaq: ATVI) today
announced record financial results for the third quarter and nine months ended
December 31, 2003.
Net revenues for the third quarter were $508.5 million or 34% higher, as
compared to $378.7 million for fiscal year 2003 third quarter. Net income for
the third quarter rose to $77.0 million, a 74% increase, compared with net
income of $44.3 million for the previous third quarter. Diluted earnings per
share grew 88% to $0.79 per diluted share, compared to $0.42 per diluted share
reported for the last fiscal third quarter.
For the nine-month period ended December 31, 2003, the company announced
record net revenues of $784.8 million, as compared to net revenues of $739.1
million reported for the nine-month period last fiscal year. The company also
announced record earnings per diluted share for the nine-month period of $0.74,
as compared to earnings per diluted share of $0.71 for the same period last
year.
(more)
Activision Reports Record Q3 2004 Earnings Results
Activision increased its net revenues and earnings per diluted share
outlook for fiscal year 2004 to $910 million in net revenues and earnings per
diluted share of $0.72 from the company's prior outlook of $870 million and
diluted earnings per share of $0.56. The company also increased its fourth
quarter outlook to $125 million in net revenues and a loss per share of $0.02
from its previous outlook of $114 million in net revenues and a loss per share
of $0.05.
Activision also provided its outlook for fiscal year 2005, beginning in
April 2004, of $1 billion in net revenues, an increase of 10% over the prior
year and earnings per diluted share of $0.90, which represents a 25% increase
year over year. For the first quarter of FY 2005, the company expects net
revenues of $170 million and earnings per diluted share of $0.05.
Robert Kotick, Chairman and CEO of Activision, Inc. commented, "I am very
pleased to announce that the company delivered record results for the third
quarter and first nine months of fiscal 2004. Our three holiday titles, Tony
Hawk's Underground, True Crime: Streets of L.A.(TM) and Call of Duty(TM), were
all top-five selling games for the holiday season and represent some of the
highest quality, most innovative products that we have ever created. The success
of our two new original properties, True Crime: Streets of L.A. and Call of
Duty, and the new direction for the Tony Hawk brand have resulted in three new
franchises from which we expect to develop a variety of games for multiple
platforms for years to come."
Kotick continued, "We have one of the strongest balance sheets in our
industry and ended the quarter with $552 million in cash and short-term
investments, low inventories and $796 million in shareholders' equity. We
believe that our fiscal year 2005 financial results will be driven by our robust
and exciting slate that includes Spider-Man 2(TM), Shrek 2(TM), Doom 3(TM),
Shark Tale(TM), Lemony Snicket's A Series of Unfortunate Events(TM), Call of
Duty: Finest Hour(TM), Rome: Total War(TM) and a sequal to the best-selling game
Tony Hawk's Underground. Our planned product slate combined with the growing
installed base of console hardware should enable us to continue to expand the
scale and scope of our business."
Business Highlights
Activision's third quarter results were driven by solid performance of its
titles across all platforms worldwide. During the quarter, the company ranked as
the #2 publisher overall on the console platforms, according to NPD Funworld,
due to strong consumer response to Tony Hawk's Underground and True Crime:
Streets of L.A. Between October and December, Activision released five new
titles: Tony Hawk's Underground, an all-new Tony Hawk experience; True Crime:
Streets of L.A., a driving, fighting and shooting game featuring Snoop Dogg and
an original soundtrack featuring more than 50 West Coast hip hop artists; Call
of Duty, a World War II based first-person action game; Empires: Dawn of the
Modern World(TM), a real time strategy game spanning five eras from the Medieval
Age to World War II; and an all new title in the Cabela's franchise, Cabela's
Dangerous Hunts(TM).
(more)
Activision Reports Record Q3 2004 Earnings Results
Activision continued its market leadership position in both the sports and
first-person action genres with Tony Hawk's Underground and Call of Duty. The
company was the only publisher to have an original intellectual property, True
Crime: Streets of L.A., rank as a top-five console/handheld title for the
holiday season.
Other highlights from the fiscal third quarter are as follows:
o According to NPD Funworld, Tony Hawk's Underground was the #2 best
selling U.S. console/handheld title in aggregate across all platforms.
Additionally, the Tony Hawk franchise reigned as the #1 franchise from
a third-party publisher.
o True Crime: Streets of L.A. was the #4 best selling U.S.
console/handheld title in aggregate across all platforms, according to
NPD Funworld. True Crime: Streets of L.A. rose up the charts after
having launched on November 4.
o According to NPD Intellect, Call of Duty was the #1 best selling PC
game in the U.S. for the calendar fourth quarter. Additionally, the
game ranked as the #5 best selling PC game for calendar 2003, despite
having launched on October 29. On October 30, Activision announced
that it had acquired Infinity Ward, the developer of Call of Duty.
o The Cabela's franchise was the #1 best-selling hunting series for
calendar 2003 according to NPD. During the holiday season, Activision
launched Cabela's Dangerous Hunts(TM) for PlayStation(R)2 computer
entertainment system and the Xbox(R) video game system from Microsoft.
Looking ahead to the fourth quarter of fiscal year 2004, Activision's slate
includes Pitfall: The Lost Expedition(TM), an action adventure game for the
PlayStation2 computer entertainment system, Xbox video game system from
Microsoft, Nintendo(R) GameCube(TM) and Nintendo(R) Game Boy(R) Advance; MTX:
Mototrax(TM), a comprehensive motocross game for the PlayStation 2 computer
entertainment system and Xbox video game system from Microsoft; and Tenchu:
Return From Darkness(TM), the acclaimed stealth ninja series for the Xbox video
game system from Microsoft.
Headquartered in Santa Monica, California, Activision, Inc. is a leading
worldwide developer, publisher and distributor of interactive entertainment and
leisure products. Founded in 1979, Activision posted net revenues of $864
million for the fiscal year ended March 31, 2003.
(more)
Activision Reports Record Q3 2004 Earnings Results
Activision maintains operations in the U.S., Canada, the United Kingdom,
France, Germany, Italy, Japan, Australia, Scandinavia and the Netherlands. More
information about Activision and its products can be found on the company's
World Wide Web site, which is located at www.activision.com.
Note: The statements made in this press release that are not historical facts
are forward-looking statements. Although the company believes that its plans,
intentions and expectations reflected in such forward-looking statements are
reasonable, a number of important factors could cause our actual future results
to differ materially from those expressed in any such forward-looking
statements.
Such factors include, without limitation, product delays, retail acceptance of
our products, industry competition, rapid changes in technology and industry
standards, protection of proprietary rights, maintenance of relationships with
key personnel, vendors and third-party developers, international economic and
political conditions, integration of recently acquired subsidiaries and
identification of suitable future acquisition opportunities.
These important factors and other factors that potentially could affect the
company's financial results are described in our filings with the Securities and
Exchange Commission, including the company's most recent Annual Report on Form
10-K and Quarterly Reports on Form 10-Q.
(Tables to Follow)
ACTIVISION, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except earnings per share data)
Nine Months
Quarter ended December 31, ended December 31,
2003 2002 2003 2002
Restated Restated
---------- ------------ ----------- -----------
Net revenues $ 508,511 $ 378,685 $ 784,759 $ 739,115
Costs and expenses:
Cost of sales
- product costs 235,301 204,881 384,302 369,004
Cost of sales
- software royalties
and amortization 23,680 33,503 50,575 67,396
Cost of sales
- intellectual
property licenses 9,464 14,918 27,008 32,704
Product development 50,354 13,758 79,828 38,768
Sales and marketing 58,503 33,875 102,025 84,644
General and administrative 14,248 10,989 35,847 37,308
---------- ------------ ----------- -----------
Total operating expenses 391,550 311,924 679,585 629,824
Operating income 116,961 66,761 105,174 109,291
Investment income, net 1,464 2,533 4,125 6,554
Income before
provision for
income taxes 118,425 69,294 109,299 115,845
Provision
for income taxes 41,444 24,847 38,248 41,708
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Net income $ 76,981 $ 44.347 $ 71,051 $ 74,137
========== ========== ========== ===========
Basic earnings
per share $ 0.87 $ 0.44 $ 0.80 $ 0.77
Weighted average
common shares outstanding 88,763 100,209 88,325 96,839
Diluted earnings
per share $ 0.79 $ 0.42 $ 0.74 $ 0.71
Weighted average
common shares
outstanding assuming
dilution 97,351 106,223 95,786 104,822
Share and earnings per share data have been restated to reflect our
three-for-two stock split for shareholders of record as of May 16, 2003, paid
June 6, 2003.
ACTIVISION, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
December 31, March 31,
2003 2003
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ASSETS
Current assets:
Cash, cash equivalents and
short-term investments $ 551,677 $ 406,954
Accounts receivable, net 241,929 15,822
Inventories 35,506 19,577
Software development 43,469 26,791
Intellectual property licenses 26,614 8,906
Deferred income taxes 36,170 38,290
Other current assets 14,217 10,565
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Total current assets 949,582 526,905
============= =============
Software development 27,394 35,281
Intellectual property licenses 22,882 36,943
Property and equipment, net 26,375 22,265
Deferred income taxes - 10,322
Other assets 844 5,081
Goodwill 74,214 68,019
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Total assets $ 1,101,291 $ 704,816
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ - $ 147
Accounts payable 170,936 45,602
Accrued expenses 128,687 58,656
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Total current liabilities 299,623 104,405
Long-term debt, less current portion - 2,671
Deferred income taxes 5,381 -
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Total liabilities 305,004 107,076
Shareholders' equity:
Common stock - -
Additional paid-in capital 731,345 592,295
Retained earnings 201,615 130,564
Treasury stock (144,128) (121,685)
Accumulated other
comprehensive income (loss) 7,455 (3,434)
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Total shareholders' equity 796,287 597,740
Total liabilities and
shareholders' equity $ 1,101,291 $ 704,816
============= =============
ACTIVISION, INC. AND SUBSIDIARIES
FINANCIAL INFORMATION
For the Quarter and Nine Months Ended December 31, 2003 and 2002
(Amounts in thousands)
Percent
Increase
Quarter Ended (Decrease)
December 31, 2003 December 31, 2002
Amount % of Total Amount % of Total
Geographic Revenue Mix
United States $ 252,114 50% $ 179,643 47% 40%
International 256,397 50% 199,042 53% 29%
------------ ---- ---------- ----- -----
Total net revenues $ 508,511 100% $ 378,685 100% 34%
Activity/Platform Mix
Publishing:
Console $ 304,996 80% $ 211,993 83% 44%
Hand-held 13,367 3% 19,574 7% -32%
PC 64,558 17% 25,162 10% 157%
------------ ---- ----------- ----- -----
Total publishing $ 382,921 75% $ 256,729 68% 49%
Distribution:
Console $ 102,979 82% $ 108,535 89% -5%
Hand-held 6,917 6% 6,058 5% 14%
PC 15,694 12% 7,363 6% 113%
------------ ---- ----------- ----- -----
Total distribution $ 125,590 25% $ 121,956 32% 3%
------------ ---- ----------- ----- -----
Total net revenues $ 508,511 100% $ 378,685 100% 34%
============ ==== =========== ===== =====
Percent
Increase
Nine Months Ended (Decrease)
December 31, 2003 December 31, 2002
Amount % of Total Amount % of Total
Geographic Revenue Mix
United States $ 381,303 49% $ 380,045 51% 0%
International 403,456 51% 359,070 49% 12%
------------ ---- ---------- ----- -----
Total net revenues $ 784,759 100% $ 739,115 100% 6%
Activity/Platform Mix
Publishing:
Console $ 439,499 77% $ 409,919 77% 7%
Hand-held 22,150 4% 45,061 8% -51%
PC 107,473 19% 81,992 15% 31%
------------ ---- ----------- ----- -----
Total publishing $ 569,122 73% $ 536,972 73% 6%
Distribution:
Console $ 171,509 79% $ 172,241 85% 0%
Hand-held 14,559 7% 11,798 6% 23%
PC 29,569 14% 18,104 9% 63%
------------ ---- ----------- ----- -----
Total distribution $ 215,637 27% $ 202,143 27% 7%
------------ ---- ----------- ----- -----
Total net revenues $ 784,759 100% $ 739,115 100% 6%
============ ==== =========== ===== =====
ACTIVISION, INC. AND SUBSIDIARIES
FINANCIAL INFORMATION
For the Quarter and Nine Months Ended December 31, 2003 and 2002
Quarter Ended Quarter Ended Nine Months Ended Nine Months Ended
December 31, 2003 December 31, 2002 December 31, 2003 December 31, 2002
Publishing Net Revenues
PC 17% 10% 19% 15%
- ----------------------------------- ----------- ------------ ------------ ------------
Console 80% 83% 77% 77%
- ----------------------------------- ----------- ------------ ------------ ------------
PlayStation 2 48% 48% 44% 42%
Microsoft Xbox 20% 13% 22% 13%
Ninetendo GameCube 10% 12% 8% 13%
Playstation 2% 10% 3% 8%
Nintendo 64 0% 0% 0% 1%
Hand-held 3% 7% 4% 8%
- ----------------------------------- ----------- ------------ ------------ ------------
Game Boy Advance 3% 6% 4% 7%
Game Boy Color 1% 1% 0% 1%
- ----------------------------------- ----------- ------------ ------------ ------------
Total publishing net revenues 100% 100% 100% 100%
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